SPDR S&P 500 ETF (ETF:SPY), iShares Barclays 20 Year Treasury Bond Fund ETF (ETF:TLT) – Electric Vehicle Dreams Remain Vulnerable To Surging Battery Prices

Russia’s Ukraine invasion has jeopardized the car industry’s multibillion-dollar bet on cheaper electric vehicle batteries, rendering them unprofitable and uncompetitive.

Global demand played a crucial role in driving the prices of critical raw materials for EV battery manufacturing nickel, lithium, and cobalt. 

But with Russia accounting for 11% of the world’s nickel and supply chains already stretched, the war has sent the cost of such commodities skyrocketing, the Financial Times writes. 

The price of these three metals required in a 60KWh battery, enough for a large family sport utility vehicle, rose from $1,395 a year ago to more than $7,400 in early March. 

The costs of aluminum, steel, and copper, also used in engine-powered models, have risen since the invasion. 

Volkswagen AG (OTC: VWAGY) CFO Arno Antlitz saw the costs of both cars increasing thanks to the rising prices of rhodium, palladium, and platinum for the catalytic converters in combustion engine cars. 

BMW sustainability chief Thomas Becker also seemed indifferent, thanks to supply contracts with battery cell suppliers and the rising petrol costs triggering interest in EVs.

Experts saw electric car prices rising in the longer term as battery material costs accounted for about a third of the EV vehicle prices paid by motorists dampening enthusiasm for both manufacturers and consumers.

Battery suppliers SK On and LG Chem Ltd (OTC: LGCLF) saw the surging prices affecting their profitability.

Negotiations between carmakers and suppliers will determine who shouldered the loftiest burden of the rising prices. Vehicle makers saw a continued fall in the cost of batteries through technology change and economies of scale.

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